Kittredge v. Grannis

• Decision Date: 31 December 1926
• Citation: 155 N.E. 93,244 N.Y. 182
• Parties: KITTREDGE v. GRANNIS et al.
• Court: New York Court of Appeals Court of Appeals

244 N.Y. 182

155 N.E. 93

KITTREDGE

v.GRANNIS et al.

Court of Appeals of New York.

Dec. 31, 1926.

Action by Benjamin R. Kittredge against Arthur E. Grannis and others. From an order of the Appellate Court (215 App. Div. 491, 214 N. Y. S. 25), affirming an order of the Special Term which denied a motion of defendant Arthur E. Grannis to strike out his name in a judgment for plaintiff, defendant named appeals.

Reversed, with directions.

See, also, 215 App. Div. 486, 214 N. Y. S. 33; 216 App. Div. 754, 214 N. Y. S. 866; 244 N. Y. 168, 155 N. E. 88.

Cardozo, Pound, and Andrews, JJ., dissenting.

Appeal from Supreme Court, Appellate Division, First department.

R. E. T. Riggs and Parker K. Deane, both of New York City, for appellant.

George F. Canfield, George Gordon Battle and R. Randolph Hicks, all of New York City, for respondent.

LEHMAN, J.

The defendant Arthur E. Grannis was, in April, 1908, a member of the firm of Grannis & Lawrence, stockbrokers and members of the Stock Exchange. They received from the firm of Coster, Knapp & Co. securities which the plaintiff had deposited with that firm. Grannis & Lawrence sold these securities, and plaintiff has never received the proceeds. The plaintiff claims and alleges a conversion of his securities.

The action was begun in 1914. The defendant Arthur E. Grannis was a nonresident of this state and was never served with the summons and complaint. The complaint was dismissed as against William C. Langley, upon proof that he was not a general partner in the firm of Grannis & Lawrence. The action proceeded against the defendant Lawrence, who had been served. On December 1, 1921, the plaintiff recovered a judgment in the sum of $149,232.37. The trial judge held that under the provisions of section 1932 of the Code of Civil Procedure (now section 1197 of the Civil Practice Act), the plaintiff was entitled to take judgment against Grannis as well as Lawrence. Judgment was accordingly entered against both ‘as copartners trading under the firm name and style of Grannis & Lawrence.’ Thereafter Grannis moved specially for an order vacating and setting aside so much of the judgment as referred to him, ‘and amending and modifying the same by striking therefrom the name of the defendant Arthur E. Grannis and the phrase, ‘copartners trading under the firm name and style of Grannis & Lawrence.’' His motion was denied, but the order denying the motion was reversed by the Appellate Division. 200 App. Div. 478, 193 N. Y. S. 84; affirmed, 234 N. Y. 501, 138 N. E. 422.

Subsequently an appeal from the judgment was taken by Robert C. Lawrence, and the judgment was reversed by order of this court and a new trial ordered. At the opening of the new trial the plaintiff's counsel said, ‘I wish to state now that the facts alleged in this action set out not only a tort, but an implied promise to pay, and that we will rely on the implied promise and ask for judgment on contract,’ and that plaintiff elected to rely on an implied promise to turn over the proceeds of the sale of his securities. The pleadings did not then contain any allegation of such implied promise, but at the close of the plaintiff's case he was permitted to amend the pleadings to allege such promise. The plaintiff has again recovered a judgment, and again the judgment so recovered has been entered against both Grannis and Lawrence, ‘copartners trading under the firm name and style of Grannis & Lawrence.’ The defendant Grannis has again appeared specially and moved to strike out his name from the judgment. His motion has been denied and the Appellate Division has affirmed the order denying the motion.

[1] Upon the original trial the complaint set forth only an action for conversion. The plaintiff did not waive the tort or allege any contract, express or implied, in fact or law, to pay to the plaintiff the proceeds of his securities, which he claimed the defendant wrongfully converted and sold. When the defendant Grannis appeared specially to object to the jurisdiction of the court to enter judgment under such circumstances against a defendant named but not served, we sustained the defendant's objection. The right to take judgment, even in form, against a defendant not served, is created solely by the statute. The statute creates such right only ‘in an action wherein the complaint demands judgment * * * against two or more defendants alleged to be jointly indebted upon contract.’ We decided that the statute has no application in this action, since the complaint did not at that time allege a joint indebtedness upon contract, and the action was tried upon the theory that defendants' liability arose solely from their conversion of plaintiff's securities. Question of whether the provision would apply if the plaintiff in this action had pleaded and proven a contract implied in law upon waiver of a tort was not before us. Here the judgment against Grannis was entered after such allegation was inserted by amendment to the complaint. Upon the present appeal two questions are before us which have not been considered or determined by the previous appeal: Are the statutory provisions intended to apply to an action where, though the complaint alleges that two or more defendants are jointly indebted upon ‘contract,’ the defendants' obligation is imposed upon them by law and their alleged promise to pay is only a fiction created to afford additional remedy for wrongful act? If so, did the court by amendment of the complaint at the trial obtain jurisdiction to enter a joint judgment though it had no such jurisdiction in this action when it was started, or even when the original judgment was reversed and a new trial ordered?

[2] We assume that the proof is sufficient to establish a cause of action for money had and received against the copartners in the firm of Grannis & Lawrence, in accordance with the allegations of the complaint as amended at the trial. We assume further that the trial judge correctly permitted the plaintiff to amend the complaint at that time, at least as against the defendant Lawrence. Errors in rulings at the trial may be corrected only by appeal, and the defendant Grannis never became, through service of process or general appearance, a party to the action, and is not a party to the appeal taken from the judgment. He may urge want of jurisdiction in the court to enter the judgment of which he complains; he may not urge error by a court which had jurisdiction. We consider upon this appeal, not the correctness for the rulings at the trial, but only their effect upon the right of the plaintiff to take judgment thereafter, at least in form, against a defendant who was not served and had not appeared.

[3] The amended complaint sets forth a cause of action in assumpsit. The plaintiff seeks to enforce, as remedy for wrong suffered, an obligation imposed by the law. That remedy rests upon the fiction that the one who has wrongfully enriched himself by disposing of the property of another for his own benefit impliedly agrees to pay to the wronged party the proceeds of the property. Judicial and extrajudicial authorities have long recognized that the obligation is imposed by the law and is not created by contract, express or implied; though the law gives remedy by action in assumpsit based upon a fiction of implied contract. See Keener on Quasi Contracts, cc. I and III; Anson on Contracts, p. 543; People ex rel. Dusenbury v. Speir, 77 N. Y. 144. ‘A contract is sometimes said to be implied when there is no intention to create a contract, and no agreement of the parties, but the law has imposed an obligation which is enforced as if it were an obligation arising ex contractu. In such a case, there is not a contract, and the obligation arises ex lege.’ Inhabitants of Milford v. Commonwealth, 144 Mass. 64, 10 N. E. 516. Question must naturally at times arise as to how far the courts will carry the fiction of an implied contract beyond the point where it lays the foundation for an action in assumpsit to afford convenient remedy for wrong suffered. Where a statute regulates causes of action based upon contract, definition of the scope of the statute should perhaps be wide enough to include the entire field where at common law remedy for a wrong might be sought by action which even in form was based on contract. In such case the distinction between boligation arising from a true contract and obligation created by law but enforced by action based upon the fiction of an implied contract should be drawn only where the courts find that the Legislature intended such distinction. Refinement of distinction may introduce undesirable technicality into the administration of justice not intended by the Legislature; yet the language of the statute may not be stretched beyond the legislative intent and technical meaning read into words which were used in ordinary sense. Many cases may be cited where the word ‘contract’ as used in statutes has been interpreted to include all obligations which at common law could become the subject-matter of an action in assumpsit or ex contractu. Such interpretation is dictated where the purpose of the statute was to base distinction on historic grounds, and on traditional form of action or remedy. Corning v. McCullough, 1 N. Y. 47, 49 Am. Dec. 287;Andrews v. Artisans' Bank, 26 N. Y. 298;Rothschild v. Mack, 115 N. Y. 1, 21 N. E. 726. Other interpretation has been given to the language of statute or Constitution where old fictions or forms of remedy could not logically be the basis for the creation of new rights or remedies. Louisiana ex rel. Folsom v. New Orleans, 109 U. S. 285, 3 S. Ct. 211, 27 L. Ed. 936. The Legislature here has provided more convenient and more complete remedy in actions against two or more defendants ‘alleged to be jointly indebted upon contract.’ It has withheld such remedy in other cases. The courts must find from the language of the statute, read in the light of its purpose, the...